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Sunday, December 21, 2014

Wither Away the Pressure on India's Patent Law

Saradindu
Bhaduri

Once again, India
is under pressure from the US
to revise its patent law. Anyone familiar with the activities of the United
States Trade Representatives (USTR) would know that this is nothing new. It has
been among the USTR’s primary mandates to use trade restrictions in order to
persuade (to put it mildly) countries to strengthen
their IPR laws. There is, however, a qualitative difference between the actions
it has initiated in the past and its current intent to persuade India to change
its IP laws. This time, the USTR is putting pressure on India to weaken
its IPR laws so as to make it compatible with patent law in the US, which
allows ever-greening of patents through smaller inventive steps.

The motive behind USTR's latest move is
clear, that is to ensure greater market mainly for US pharmaceutical
innovations, most of which, by the USFDA’s own admission, do not provide major
therapeutic advancement. In
2012, for instance, such drugs constitute around 80% of New Drug Application
submitted to the USFDA for approval.[1] Homogenising patent laws across countries, with such
narrow inventive steps, would kill incentive to innovate major therapeutic
advancements, which is clearly not in the best interest of patients,
particularly those who are suffering from life-threatening diseases such as cancer,
and AIDS. In addition, this pressure by the US government also
demonstrates an attempt to promote a unilateral concept of what is TRIPS
compatible, ignoring the multilateral wisdom, agreed on by all the WTO
signatories, which granted individual countries flexibility to determine
inventive steps in their respective patent laws. Opposition to
this move is, therefore, important to keep the sanctity of multilateralism
alive.

In general, beyond
pharmaceuticals and biotechnology, patent's role in incentivising innovation
remains suspect.[2]Few
days ago, however, a national newspaper carried an opinion by the head of an
international agency that strengthening the patent laws is the panacea for India to avoid
the slip it has witnessed last year in the global innovation ranking.
Interestingly this claim was made without any data on India’s ranking
on patents. A quick glance at the International Property Rights Index (IPRI) prepared
annually by the Hernando de Soto
Foundation would reveal how simplistic this claim is.[3]As
per the report, India’s
ranking in terms of patent protection (with a score of 7.5 on a 10 point scale)
is 38th, while Brazil’s
is 50th. Yet, Brazil
ranks 61st in the global innovation ranking, while Indiastands at 76th. Similarly, Russia stands 43rd in patent ranking
(5 place lower than India).
In global innovation ranking, however, Russia
is placed 49th- 27 place higher than India.[4]
Several such anomalies are visible even among the top ranked countries. For
instance, France
ranks 3rd in terms of patent protection, while 22nd in
global innovation ranking. Similarly, Japan ranks 3rd in terms of
patent protection, but a much lowly 21st in innovation ranking. On
the other hand, UK
occupies second position in global innovation ranking with 12th
ranking in terms of patent protection. Israel, ranking 30th in
patent protection ranks 15th in innovation ranking. In other words,
a simplistic view that asks exclusively for strengthening (further) patents for
a country’s innovation capability ignores what is well known among innovation
scholars; that innovation ecosystem of a region/country depends on complex interactions
among various agencies, the risk taking attitude of private industry, funding
on education, and several other factors. IPR is only one among many factors in
that innovation ecosystem, that too with unclear contribution.

In such a scenario, over emphasising the
significant of IPR drifts our attention away from the more serious problems facing
the country. In a recent research, Patra
(2014) compares the route to foreign direct investment in ICT for India and China.[5]
While most of the FDI to Chinese firms take the form of joint research venture,
in India FDI buys out domestic firms. This result can be interpreted to mean
that Indian business owners prefer selling out for quick returns rather than
making long-term investments in R&D, beyond a moderate scale. Newspaper
reports also attest this proposition[6].
Research reports have highlighted that transfer of technologies from CSIR
laboratories to industry is often hurt by factors such as lack of mutual trust
and industry’s preference for proven technologies from abroad, which patents
alone will be unable to solve.[7]
The over emphasis on patents also takes
a biased view on the discourse on technology generation and
innovation taking place in big
firms. It pays to remember that 90% of India’s labourforce is engaged in small firms and informal
sectors. National Innovation Foundation of India in recent years has admirably
showcased many innovations by grassroot individuals, many of whom may not have
heard about patents in their lifetime, and the lack of patent protection has
not deterred them from innovating and raising productivities in their small
manufacturing units. Yet, the recent Science Technology Innovation Policy 2013 makes on mention on how to incentivise
such innovations, which have tremendous potential for improving the lives of
common people.[8]

Incidentally,
however, the government of India
has set up yet another think tank to “draft policy on IPR”. A
crucial point with such attempts to draft and redraft IPR laws and institution
is its resource intensity. These days, governmens of developing countries are
spending massive resources to build internationally compettitive institutional
capacity of IPR. The report of the Commission on Intellectual Property (2002)
cited an UNCTAD report to point out that Chile spent US$ 718,000 to improve
its IP infrastructure in 1996 with a recurring cost of US$ 837,000. Similarly, Egypt
calculated its initial cost to be US$ 800,000 with annual recurring costs of
US$1 Million. Bangladesh
had anticipated one-time cost of US$ 250,000 for drafting legislation on IP. It
required another US$1 million in annual costs for upgrading judicial work,
training and costs of equipment necessary to develop the IP infrastructure. The
available secondary data reveals that Pakistan increased its budgetary
allocation on IPR by US$ 0.4 million, while revenue from IPR declined by US$0.5
million during 2006-2009. During the same time its budgetary allocation on
health dropped by 0.7% of GDP, and the share of GDP on education did not
increase at all. India too has already
spent
huge money on building its IPR infrastructure, data regarding which is not
readily available.The authors suspect such draining of resources from priority
sectors such as health and education to building up IP infrastructure has become
a regular phenomenon in many developing countries.[9]
This may adversely impact the already-worsening situation around human
development indicators in these nations. Note that India
ranks 135th, Pakistan
146th, Bangladesh
147th, and Egypt
110th in the latest Human Development Report; much worse than their
rankings in IPRI.

Definitely, there seems to be more than
moderatejustification for active intervention from the policy makers, to wither
away the current pressure on our IP
laws, and, eventually, the current trend of thinking on the issue of IPR. India should
lead the way.

[3]Available
at internationalpropertyrightsindex.org. Last accessed on 1 December, 2014.

[4]
China ranks 14 place higher than India in terms of patent protection, but
almost at par with India in terms of overall IPR protection, and a huge 50
place higher in innovation ranking.

[5]Patra
SK (2014) Innovation network in IT industry: a study of collaboration patterns
among selected foreign IT firms in India and China. In: S. Chakraborty and A
Das (Eds). Collaborations in international and comparative librarianship. ALIS.

[6]
See, for instance, “The great Indian home grown brand sale” by Vinay Kamath in
BusienessLine, 27 October 2013. Last accessed 1 December, 2014.

[7]See,
For instance, Ray, A (2003) A study of R&D Incentives in India: structural
changes and impact. Research Report submitted to DST. Government of India.

[8]Fayaz
Ahmad Sheikh, a research scholar at the Centre for Studies in Science Policy,
has written a fantastic review of the policy highlighting these lacunae in the
approach of the policy makers in Current Science early this year.

[9]At the same time, the prospect for
earning revenue from patent remains bleak in most of these countries, due to
low inventive capacity and low demand for new products. Some countries,
including India, have recently shown a net positive balance mostly due to
earnings from trademarks.

The Author teaches at the Centre for Studies in Science Policy, Jawaharlal Nehru University. Email: sdindu@yahoo.co.uk

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